CCPA fines Dial4Trade ₹10 lakh over online ammonium nitrate listings; seven platforms under scrutiny

The Central Consumer Protection Authority (CCPA) has imposed a ₹10 lakh penalty on Dial4Trade Technologies Private Limited for facilitating the online listing, hosting, advertising and sale of ammonium nitrate without the mandatory regulatory safeguards required under law.

The regulator has also directed the platform to immediately discontinue the listing, hosting, advertising or facilitation of sale of ammonium nitrate, as well as any other substance classified as an explosive under the Explosives Act, 1884.

The action is significant as the CCPA has rejected Dial4Trade’s argument that it was merely a B2B marketplace intermediary and therefore not responsible for products uploaded by third-party sellers. The authority said the platform had permitted ammonium nitrate to be offered in quantities as low as a single unit and lacked minimum-order or institutional-buyer verification mechanisms that would ordinarily support its B2B claim.

The CCPA found that the listings did not adequately disclose or verify critical information, including the seller’s valid Petroleum and Explosives Safety Organisation (PESO) licence, the identity and licensed status of buyers, transaction traceability requirements and legal restrictions governing possession and use of ammonium nitrate.

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The regulator also took exception to imagery accompanying the listings that depicted explosions and blast effects. It said such imagery was likely to attract attention to the product rather than communicate its hazardous and regulated nature.

According to the CCPA, presenting a regulated explosive substance on a digital marketplace as an ordinary product, without informing users that its lawful purchase requires the prescribed licence, amounts to misleading advertising and an unfair trade practice under the Consumer Protection Act, 2019.

Marketplace responsibility

The authority also examined Dial4Trade’s reliance on intermediary safe-harbour provisions under Section 79 of the Information Technology Act, 2000. It said such protection is conditional on compliance with applicable due-diligence requirements.

The CCPA found that relying on reactive removal of listings after they were detected was not sufficient for regulated and hazardous substances. It also noted that Dial4Trade had the ability to block sellers and remove products from its platform, indicating that it exercised control over content hosted on the marketplace.

The authority further held that the Consumer Protection (E-Commerce) Rules, 2020 apply to marketplace e-commerce entities, irrespective of how a platform describes its business model.

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Seven other platforms under examination

The action against Dial4Trade is part of a wider CCPA examination into the online sale of hazardous chemicals, explosive substances and related precursors.

The substances being examined include ammonium nitrate, gun powder, picric acid and pentaerythritol tetranitrate (PETN).

The CCPA said the matter is currently under examination in respect of seven other platforms: IndiaMART, Justdial, Sigma-Aldrich India, Exporters India, Ibuychemikals, Alpha Chemika and TradeIndia.

The regulator reiterated that ammonium nitrate is a regulated substance and that its unauthorised sale or possession without prescribed safeguards can pose risks to public safety. It said online marketplaces must undertake appropriate due diligence when dealing with products subject to licensing and other regulatory restrictions.

Dial4Trade has been directed to submit a compliance report within 15 days of the order.